June 25 (Bloomberg) -- Export deals with China are helping
insulate two of Russia’s biggest energy producers from the rout
that sent emerging-market equities to a one-year low yesterday.

OAO Rosneft, the world’s biggest publicly traded oil
producer by output, rose for a second day to a one-month high of
$7.005 by 9:55 a.m. in London after signing a $270 billion oil
supply deal with state-run China National Petroleum Corp. that
includes $70 billion in prepayments. OAO Novatek reached a four-month high after a separate agreement with CNPC to supply
liquefied natural gas to Asia. The Bloomberg Russia-US Equity
Index of the most-traded Russian stocks in the U.S. slid 0.8
percent yesterday to the lowest level since June 5, 2012.

The deals will help the Russian companies pare borrowing
and give them access to the world’s largest energy consumer and
second-biggest economy, which is forecast to grow 7.4 percent in
2013 as the European Union contracts, according to Andrey
Polischuk, an analyst at ZAO Raiffeisenbank in Moscow.

“For Novatek, this means a reduction in the financing of a
major project,” Polischuk said in a telephone interview. “With
Rosneft, the prepayment virtually covers its entire debt load.”

The MSCI Emerging Markets Index has dropped 7.1 percent and
Russia’s benchmark Micex has lost 2.5 percent since June 18, the
day before Federal Reserve Chairman Ben S. Bernanke said the
central bank may pare bond purchases this year. In the same
span, Novatek has climbed 2.7 percent and Rosneft is up 2.6
percent.

RTS Futures

The Bloomberg Russia-US Equity Index retreated to a one-year low in New York yesterday. The Market Vectors Russia ETF,
the largest dedicated Russian exchange-traded fund, slid 0.8
percent to $24.56.

Rosneft became the world’s biggest publicly-traded crude
producer by output after buying TNK-BP for $55 billion this
year. The company has $71.8 billion in outstanding debt, and its
net debt is the third-highest in the world among 521 oil and gas
companies with a market value of at least $500 million,
according to data compiled by Bloomberg.

The agreements with China “offer the opportunity to
provide incremental financial resources to further Rosneft’s
exploration and production program,” the company’s press office
in Moscow said in an e-mailed response to questions. Press
officials didn’t elaborate on the planned prepayments.

Bashneft Report

Rosneft “can now replace short-term debt with longer
duration, lower the cost of that debt and be less susceptible to
the vagaries of the oil price,” Julian Rimmer, a trader at CF
Global Trading UK Ltd. in London said by e-mail.

Rosneft is considering the possibility of buying OAO
Bashneft, Vedomosti reported, citing people familiar with
Bashneft shareholder AFK Sistema. Rosneft’s spokesman declined
to comment today, while Sistema’s spokeswoman Yulia Belous said
that Sistema has not received any offer from Rosneft.

Crude for August delivery rose 0.5 percent to $95.62 a
barrel on the New York Mercantile Exchange. Brent oil for August
settlement gained 0.4 percent to $101.53 a barrel on London’s
ICE Futures Europe exchange. Urals crude, Russia’s major export
blend, rose 0.3 percent to $101.11.

Yamal LNG

Novatek invited CNPC to acquire 20 percent of the planned
$20 billion Yamal LNG project and agreed to supply at least 3
million tons of the chilled fuel by tanker to the Beijing-based
company. Now limited to Russia’s domestic market, Novatek is
awaiting the government’s decision on loosening OAO Gazprom’s
control over LNG shipments abroad.

Novatek will benefit from the money raised by selling a
stake in the project, and the biggest advantage may be winning a
guaranteed market for exports, according to Kirill Bagachenko,
who manages about $3 billion in Russian equities at TKB BNP
Paribas Investment Partners in St. Petersburg.

“Novatek secured gas demand,” Bagachenko said in an e-mail. “It may be quite tricky in the future as there is a
number of projects whereas global demand growth is limited.”